Do Hedge Funds Love Morningstar, Inc. (MORN?

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Morningstar, Inc. (NASDAQ:MORN).

Morningstar, Inc. (NASDAQ:MORN) was in 24 hedge funds' portfolios at the end of June. The all time high for this statistic is 25. MORN investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 25 hedge funds in our database with MORN positions at the end of the first quarter. Our calculations also showed that MORN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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Kevin Oram Praesidium Investment Management
Kevin Oram Praesidium Investment Management

Kevin Oram of Praesidium Investment Management Company

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Do Hedge Funds Think MORN Is A Good Stock To Buy Now?

At second quarter's end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MORN over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Morningstar, Inc. (NASDAQ:MORN) was held by Select Equity Group, which reported holding $935.1 million worth of stock at the end of June. It was followed by Renaissance Technologies with a $122.3 million position. Other investors bullish on the company included Echo Street Capital Management, Royce & Associates, and Praesidium Investment Management Company. In terms of the portfolio weights assigned to each position Becker Drapkin Management allocated the biggest weight to Morningstar, Inc. (NASDAQ:MORN), around 4.6% of its 13F portfolio. Praesidium Investment Management Company is also relatively very bullish on the stock, setting aside 3.22 percent of its 13F equity portfolio to MORN.

Because Morningstar, Inc. (NASDAQ:MORN) has witnessed a decline in interest from the smart money, logic holds that there was a specific group of hedge funds that elected to cut their entire stakes in the second quarter. It's worth mentioning that Paul Tudor Jones's Tudor Investment Corp cut the biggest stake of the 750 funds watched by Insider Monkey, worth about $2.2 million in stock. Mika Toikka's fund, AlphaCrest Capital Management, also dropped its stock, about $1.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the second quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Morningstar, Inc. (NASDAQ:MORN) but similarly valued. We will take a look at CF Industries Holdings, Inc. (NYSE:CF), Intellia Therapeutics, Inc. (NASDAQ:NTLA), Darling Ingredients Inc. (NYSE:DAR), Lightspeed Commerce Inc. (NYSE:LSPD), Repligen Corporation (NASDAQ:RGEN), ICON Public Limited Company (NASDAQ:ICLR), and Magellan Midstream Partners, L.P. (NYSE:MMP). All of these stocks' market caps are similar to MORN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CF,47,955523,3 NTLA,41,2282192,12 DAR,41,839147,8 LSPD,29,649487,8 RGEN,35,1285346,-3 ICLR,39,1301455,10 MMP,13,89137,-1 Average,35,1057470,5.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1057 million. That figure was $1459 million in MORN's case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand Magellan Midstream Partners, L.P. (NYSE:MMP) is the least popular one with only 13 bullish hedge fund positions. Morningstar, Inc. (NASDAQ:MORN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MORN is 49. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on MORN as the stock returned 16.2% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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